The proposed study seeks to estimate the effect of publicly-financed health insurance programs on the use of health services and on equity in the distribution of health services. Using data from Ecuador, the study will analyze the current effects of two insurance programs, and will also run simulations under a series of assumptions matching policy options for expanding health insurance. The study reviews and brings together separate bodies of literature concerning the modeling and empirical estimation of health care demand and the definition and measurement of equity in the health sector. A methodology is proposed for determining the impact of the insurance programs on equity. A principal methodological issue is that the choice of insurance is not random, creating a selection bias in the observed effect of insurance on the use health services. Different approaches to correcting for selection bias are discussed, with emphasis on the choice of appropriate identifying variables. The proposed research addresses significant gaps int he existing literature. In particular, methodologies are not currently well developed for the evaluation of the effect of health insurance programs and for the estimation of equity in the distribution of health services. Additionally, the research addresses important policy questions, not only for Ecuador but for other countries, including the United States, contemplating the reform or expansion of publicly-financed health insurance programs.